By Lyle Adriano, INSURANCE BUSINESS
September 23, 2022
Consumer Watchdog has issued a public statement petitioning California Insurance Commissioner Ricardo Lara and the California Department of Insurance (CDI) to reject Allstate Insurance’s proposal to raise auto insurance rates by $165, as well as the insurer’s rating system, which allegedly discriminates against certain consumers.
According to the consumer advocate group, Allstate’s rate hike will affect more than 900,000 policyholders in the state, who face an average premium increase of $167.
Allstate previously announced in March that its proposed increases would represent an approximate 5.1% increase in its total auto insurance written premiums. It also said in an earlier statement that since Q4 2021, it implemented 41 rate increases, equal to $1.2 billion in gross premiums.
Consumer Watchdog also called out Allstate for its proposed job-based rating plan. Said plan would make low-income workers such as custodians, construction workers, and grocery clerks pay higher premiums than drivers in the company’s so-called “professional” occupations, which include engineers with a college degree, who get a 4% rate reduction.
"Allstate's two-tiered system is illegal under voter-approved Proposition 103, which prohibits the use of education and occupation as rating factors," said Consumer Watchdog attorney Pamela Pressley. "Rather than continuing to approve individual companies' discriminatory rating plans like Allstate's, Commissioner Lara needs to follow through on his three-year-old promise to stop unfairly discriminatory rating practices based on occupation on an industry-wide basis."
The statement also called out Lara for failing to act on a regulation proposed three years ago, which would have curbed job and education-based rate discrimination.
In addition to the issues, Consumer Watchdog has called on the commissioner to notice a public hearing to determine how much additional premium surcharges Allstate owes California policyholders due to their reduced driving activity during the period of pandemic stay-at-home orders. The organization cited its own data, which found that Allstate has so far only provided premium credits totaling less than half of the amount that it overcharged customers from at least March 2020 to June 2021.
The CDI and Consumer Watchdog have previously filed public documents with a state administrative law judge accusing Allstate of overcharging policyholders through a practice called “price optimization” – charging higher premiums to customers unlikely to switch insurers.